STOCK-BASED COMPENSATION

We have granted stock options and restricted stock awards under two stock incentive plans: the 2007 Long-Term Incentive Plan (the "Plan") and the 2006 Non-employee Director Stock Incentive Plan (the "Director Plan "). Awards under the following two compensation programs have been granted pursuant to the Plan: (1) the Performance Share Award Program ("PSAP") and (2) the Restricted Share Award Program ("RSAP").

Since the inception of the Plan in 1995 until 2001, we awarded stock options as the primary form of equity compensation. In 2001, we reassessed the form of award and elected to begin the use of restricted share grants which we believe are a stronger motivational tool for our employees. Restricted share awards provide some value to an employee during periods of stock market volatility, whereas stock options may have limited perceived value and may not be as effective in retaining and motivating employees when the current value of our stock is less than the option price. Currently, our long-term equity incentive compensation is exclusively in the form of restricted shares and performance restricted shares as no stock options were granted during 2012.

We issue shares from either treasury stock or authorized shares upon the exercise of options or lapsing of vesting restrictions on restricted stock. In 2012, we issued 1,042 shares and 299,964 shares out of treasury stock relating to the exercise of stock options and the vesting of restricted stock, respectively. We do not use cash to settle equity instruments issued under stock-based compensation awards.

2007 Long-term Incentive Plan

On April 2, 2007, the 1995 Long-Term Incentive Plan was amended, restated and renamed as the 2007 Long-Term Incentive Plan. The primary changes effected by the 2007 amendment and restatement was to (a) extend the period during which awards may be granted under the Plan to February 13, 2017, (b) require all stock options awarded under the Plan to have an exercise price per share that is at least equal to the fair market value of a common share as of the date of grant of the option (subject to adjustment under certain circumstances, such as upon a reorganization, stock split, recapitalization, or other change in our capital structure), (c) provide that stock appreciation rights may be granted under the Plan, (d) prohibit the repricing of stock options awarded under the Plan, (e) provide that no amendment to the Plan that would require shareholder approval pursuant to the requirements of the New York Stock Exchange ("NYSE"), the NYSE Euronext Amsterdam Stock Exchange ("Euronext Amsterdam") or any exchange on which we are listed will be effective prior to approval of our shareholders, and (f) expand the performance goals enumerated under the Plan upon which restricted share awards may be based. The amendment and restatement of the Plan does not increase the number of common shares subject to the Plan. The Plan provides for a maximum of 10,800,000 common shares to be granted to eligible employees. At December 31, 2012, approximately 530,700 shares were available for the grant of new awards under the Plan. Specifically, we encourage share ownership by awarding various long-term equity incentive awards under the Plan, consisting of the PSAP and RSAP. We believe that widespread common share ownership by key employees is an important means of encouraging superior performance and employee retention. Additionally, our equity-based compensation programs encourage performance and retention by providing additional incentives for executives to further our growth, development and financial success over a longer time horizon by personally benefiting through the ownership of our common shares and/or rights.

Performance Share Award Program

On April 1, 2010, certain executives were awarded rights to receive an aggregate of 90,000 common shares if our calculated return on invested capital ("ROIC"), as defined in the PSAP, is in the top decile of the Bloomberg Comp Group at the end of the performance period, which ended on December 31, 2012. This arrangement was recorded as an equity award that required us to recognize compensation expense totaling $5.5 million over the performance period that began on April 1, 2010, of which $1.8 million, $2.1 million and $1.6 million was been recognized in 2012, 2011 and 2010, respectively. At December 31, 2012, Core Lab had the highest ROIC compared to the Bloomberg Comp Group. The Compensation Committee of our Board of Supervisory Directors verified that the performance target criteria had been met and 85,200 shares vested (4,800 shares were forfeited prior to the end of the performance period due to the retirement of one of the participants). We issued these common shares on December 31, 2012 and, simultaneously, the participants surrendered 28,829 common shares to settle any personal tax liabilities which may result from the award, as permitted by the agreement. We recorded these surrendered shares as treasury stock with an aggregate cost of $3.2 million, at $109.31 per share. We have recognized a tax benefit from the vesting of the PSAP of $1.4 million in 2012.

On April 1, 2011, certain executives were awarded rights to receive an aggregate of 86,207 common shares if our calculated ROIC, as defined in the PSAP, is in the top decile of the Bloomberg Comp Group at the end of the three year performance period, which ends on December 31, 2013. Unless there is a change in control as defined in the PSAP, none of these awards will vest if the specified performance target is not met as of the last day of the performance period. This arrangement is recorded as an equity award that requires us to recognize compensation expense totaling $8.0 million over the performance period that began on April 1, 2011, of which $2.7 million and $2.4 million has been recognized in 2012 and 2011, respectively. The unrecognized compensation expense is expected to be recognized over an estimated amortization period of 12 months.

On February 17, 2012, certain executives were awarded rights to receive an aggregate of 79,009 common shares if our calculated ROIC, as defined in the PSAP, is in the top decile of the Bloomberg Comp Group at the end of the performance period, which ends on December 31, 2014. Unless there is a change in control as defined in the PSAP, none of these awards will vest if the specified performance target is not met as of the last day of the performance period. This arrangement is recorded as an equity award that requires us to recognize compensation expense totaling $9.4 million over the performance period that began on January 1, 2012, of which $3.1 million has been recognized in 2012. The unrecognized compensation expense is expected to be recognized over an estimated amortization period of 24 months.

Restricted Share Award Program

In 2004, the Compensation Committee of our Board of Supervisory Directors approved the RSAP to attract and retain the best employees, and to better align employee interests with those of our shareholders. Under this arrangement we awarded grants totaling 105,774 shares, 95,760 shares, and 142,070 shares in 2012, 2011, and 2010, respectively. Each of these grants has a vesting period of principally six years and vests ratably on an annual basis. There are no performance accelerators for early vesting for these awards. Awards under the RSAP are classified as equity awards and recorded at the grant-date fair value with the compensation expense recognized over the expected life of the award. As of December 31, 2012, there was $30.4 million of unrecognized total stock-based compensation relating to non-vested RSAP awards. The unrecognized compensation expense is expected to be recognized over an estimated weighted-average amortization period of 51 months. The grant-date fair value of shares granted was $12.2 million, $10.6 million and $12.3 million in 2012, 2011 and 2010, respectively and we have recognized compensation expense of $9.9 million, $12.4 million and $6.1 million in 2012, 2011 and 2010, respectively. The total grant-date fair value, which is the intrinsic value of the shares, vested was $10.3 million, $8.4 million and $7.0 million in 2012, 2011 and 2010, respectively. We have recognized a tax benefit from the vesting of the RSAP of $3.9 million, $2.6 million and $1.0 million in 2012, 2011 and 2010, respectively.

2006 Non-employee Director Stock Incentive Plan

The Director Plan provides common shares for grant to our eligible Supervisory Directors. The maximum number of shares available for award under this plan is 1,400,000 common shares. As of December 31, 2012 approximately 572,205 shares were available for issuance under the Director Plan. On June 28, 2006, the 1995 Non-employee Director Stock Option Plan was amended, restated and renamed as the 2006 Non-employee Director Stock Incentive Plan. The primary change effected by the 2006 amendment was to eliminate the automatic, formula grant of stock options under the prior plan and to replace that formula approach with the discretionary right of the Supervisory Board to grant stock options, restricted shares, or any combination thereof. Only non-employee Supervisory Directors are eligible for these equity-based awards under the Director Plan.

Performance Share Award Program

On July 15, 2009, we awarded rights relating to an aggregate of 13,884 PSAP shares under the Director Plan to our non-employee Supervisory Directors for which the performance period began on July 15, 2009 and ended on July 15, 2012. The performance target for this award was based on a calculated ROE, as defined in the agreement, with full vesting occurring if our ROE equaled or exceeded the returns earned by members of the S&P 500 Oil & Gas Equipment & Services index, with 50% of the shares vesting if our return was at or above the 50^th percentile of the members' return and 100% of the shares vesting if our return was at or above the 75^th percentile of the members' return. On July 15, 2012, at the end of the performance period, it was determined that the vesting criteria had been met and all shares vested in full at that time. This arrangement was recorded as an equity award that required us to recognize compensation expense totaling $0.6 million over the performance period that began on July 15, 2009, of which $0.1 million, $0.2 million and $0.2 million was recognized in 2012, 2011 and 2010, respectively.

On April 1, 2010, we awarded rights relating to an aggregate of 9,180 PSAP shares under the Director Plan to our non-employee Supervisory Directors for which the performance period began on January 1, 2010 and ended on December 31, 2012. The performance target for this award was based on a calculated ROIC, as defined in the agreement, with full vesting occurring if our ROIC was in the top decile of the Bloomberg Peer Group at the end of the performance period. At December 31, 2012, at the end of the performance period it was determined that the vesting criteria had been met and all shares vested at that time. This arrangement was recorded as an equity award that required us to recognize compensation expense totaling $0.6 million over the performance period that began on April 1, 2010, of which, $0.2 million, $0.2 million and $0.2 million was recognized in 2012, 2011 and 2010, respectively.

Restricted Share Award Program

In 2011, the Compensation Committee of our Board of Supervisory Directors approved the RSAP to compensate our non-employee Supervisory Directors. Prior to 2011, the non-employee Supervisory Directors were awarded shares under the PSAP plan. Under this arrangement we awarded grants totaling 7,987 shares and 10,283 shares in 2012 and 2011, respectively. Each of these grants has a vesting period of 3 years. There are no performance accelerators for early vesting for these awards. Awards under the RSAP are classified as equity awards and recorded at the grant-date fair value with compensation expense recognized over the expected life of the award. As of December 31, 2012, there was $1.2 million of unrecognized total stock-based compensation relating to non-vested RSAP awards. The unrecognized compensation expense is expected to be recognized over an estimated weighted-average amortization period of 23 months. The grant-date fair value of shares granted was $1.0 million and $1.0 million in 2012 and 2011, respectively, and we have recognized compensation expense of $0.6 million and $0.2 million in 2012 and 2011, respectively.

Non-vested restricted share awards outstanding under both the 2007 Long-term Incentive Plan and the 2006 Non-employee Director Stock Incentive Plan as of December 31, 2012 and changes during the year were as follows:



	Number of Shares		Weighted Average Grant Date Fair Value
Non-vested at December 31, 2011	774,549		$	69.03
Granted	192,770		117.53
Vested	(299,994	)	56.60
Forfeited	(33,015	)	71.66
Non-vested at December 31, 2012	634,310		$	89.42

Stock Options

The following table presents the change in outstanding stock options under the Plan and the Director Plan for the years ended December 31, 2012 and 2011. All options outstanding at December 31, 2012 are fully vested.



	Shares		Range of Exercise Prices	Weighted Average Exercise Price		Weighted Average Remaining Life	Average Intrinsic Value - Per Share
Balance as of December 31, 2011	13,042		$ 4.42 - 12.50	$	6.77	1.7	$	107.18
Options granted	—		—	—
Options exercised	(1,042	)	4.75	4.75
Options forfeited	—		—	—
Balance as of December 31, 2012	12,000		$ 4.42 - 12.50	$	6.95	0.8	$	102.36

The total intrinsic value of options exercised during 2012, 2011 and 2010 were $0.1 million, $4.0 million and $2.7 million, respectively.

For the years ended December 31, 2012, 2011 and 2010, stock-based compensation expense recognized in the income statement is as follows (in thousands):



	2012		2011		2010

Cost of product sales and services	$	8,835	$	10,960	$	5,138
General and administrative	9,546		6,205		3,379
Total stock-based compensation expense	$	18,381	$	17,165	$	8,517